Louis Proyect: The Unrepentant Marxist

August 20, 2008

Pavel V. Maksakovsky: The Marxist Theory of the Cycle

Filed under: economics,Introduction to Marxism class — louisproyect @ 6:46 pm

The other day I posted an excerpt from an article that appeared on the Adbusters website titled “Thought Control in Economics” that dealt with how university economics department would not tolerate anything beyond the bounds of neoclassical theory, especially Marxism:

These accounts are symptoms of a pervasive system of thought control in economics. But no one knows more about how unwelcome ideas are kept from being expressed in economics departments and tainting the minds of curious students than Fred Lee, a professor at the University of Missouri-Kansas City. He has documented over a hundred cases where economists who wouldn’t drink the neoclassical Kool-Aid got pushed aside ? a problem that began over a century ago when the working classes started to teach themselves Marxist theory.

“The leading economists of the day feared that if workers understood Marxist theory, the working class would realize how badly they were being exploited,” he says. “Fearing this might lead to revolutionary fervor, economists sought to recast economic theory to neutralize the Marxist critique. They limited their neoclassical theory to looking at innocuous issues such as how prices change. They also sought to prove that everyone gets paid exactly in accordance with their net contribution to society, implying that workers aren’t exploited and that is no basis for workers to claim a fairer share of the pie.”

Listening to Lee was making me realize that there is a time-honored tradition in economics of avoiding questions about who gets the wealth, who benefits and who loses with different economic policies. But there have been times when it was possible to explore other schools of thought.

http://www.adbusters.org/magazine/78/thought_control_in_economics.html

This led to the following comment on the Marxism list:

I don’t understand this. Capital needs to have good predictions and models, for doing well. If non-mainstream economists came up with better models (that made better predictions), why won’t capital fund these researchers, given that it is in capital’s interest to have better, more accurate predictions?

Also, notice that non-equilibrium, complex-systems approaches in economics, which were very non-mainstream 30 years ago, are now quite mainstream. So it’s not like tradition always prevails in the field…

Which prompted the following response:

Isn’t that a central contradiction of mainstream economics? On the one hand, it has a strongly ideological character. It’s designed to attempt to place capital and capitalism in the best possible light, as efficient and just. On the other hand, mainstream economics is supposed to be a science, and as such it is supposed to serve as a guide to both businessmen and policymakers. What happens there is, as there often is apparently, a clash between these two aspects of mainstream economics?

This exchange was in the back of my mind when I came across this passage from Richard B. Day’s “Pavel V. Maksakovsky: The Marxist Theory of the Cycle” in Historical Materialism, 2002, number 3. I discovered recently that Columbia University now includes HM in its electronic archives, with the exception of the latest 12 months. I consider this to be a very important journal even if they are in the bad habit of making almost nothing available online to the unwashed masses. Day writes:

Georg Lukács once remarked that bourgeois thought could not even contemplate the dialectical movement of history, for to do so would be to acknowledge a future beyond capitalism. According to Lukács, bourgeois economists reason in terms of general equilibrium because the `ultimate barrier to the economic thought of the bourgeoisie is the crisis’. Looking at recent developments in economic theory, Maksakovsky acknowledged that this conceptual inability to deal with crisis had given way to a new concentration on the theory of the conjuncture. He understood this term to encompass both broad movements of the capitalist system over time and also the intersection of economic forces that define conditions at any given moment. Gustav Cassel proposed that the theory of the conjuncture should regard all fluctuations of capitalism as `normal’ and look for ways to contain them within the existing social order. If capitalism were conceived in dynamic terms, crises would be ideologically and semantically neutralised; if adequate market prognoses could be made, they might also be neutralised in fact. Maksakovsky saw the political rationale of the new theories in an attempt to establish `organised capitalism’. He summarised the ambitions of Western conjuncture theorists this way:

. . . Every capitalist will have the ability to anticipate in advance the consequences of his economic activities and consciously avoid both errors of judgement and excessive enthusiasm. The powerful [institutional] levers of the capitalist system – the state, trusts and so forth – are to become equally powerful levers for implementing a deliberate conjunctural policy in the interests of the national economy. The aggregate effect of these co-ordinating efforts is to lead to `moderation’ of the conjuncture, to curtail its amplitude and overcome its specific phenomenon – the crisis – which is regarded as a blight on an otherwise `wholesome’ system.

To Maksakovsky, the newly fashionable talk of conjuncture theory showed that bourgeois economists were moving beyond abstract mathematical ideals of equilibrium and theoretical models of comparative statistics. In that respect, they appeared to be catching up with Marxism. However, there remained fundamental methodological differences. Bourgeois writers began with empirical data and then attempted inductively to formulate a theory. Cassel wrote that he intended to `proceed from the concrete to the abstract’, looking first at data on industrial production and then turning to other data concerning prices, incomes and capital markets, hoping to end their interconnections. Maksakovsky replied that `The theory of the conjuncture must be constructed mainly deductively.’ This did not mean ignoring empirical indicators; it did mean that their significance could only be grasped in terms of fundamental laws.

Despite the complexity of the writing, the point being made here is fairly straightforward. Bourgeois economists simply cannot grasp the crisis-ridden nature of the system they are apologists for. It is not within their vocabulary, as Fred Lee alluded to above.

Furthermore, Maksakovsky was also operating squarely within the Marxist “crisis” theory of the early 20th century that emerged as a reaction to “Legal Marxism” in Czarist Russia and related Western European tendencies in Marxism to see the capitalist system as having “self-correcting” mechanisms. These mechanisms are closely related to the “conjuncture theory” referred to above. For Rosa Luxemburg and Henryk Grossman, two opponents of these currents (each with their own approach-under consumption, and over-accumulation respectively), the failure to see the crisis tendencies in capitalism served a reformist political agenda.

As I have pointed out in presentations made to the Yahoo Marxism reading group, there was a tendency among the Marxist economists being critiqued by Luxemburg and Grossman to treat the “reproduction cycle” of V. 2 of Capital, in which Marx described what amounts to a business cycle, as some kind of proof that there was nothing within the capitalist system to cause it to break down. Marx’s goal in V. 2 of Capital, however, was quite limited. He simply was trying to abstract out certain aspects of the capital accumulation cycle in order to explain how the system attempted to resolve within its own means the problems thrown up by its normal functioning. He bracketed out questions such as war and proletarian revolution, which have a tendency to render the “reproduction cycle” moot.

A word or two about Pavel V. Maksakovsky is in order. Richard B. Day fills in some biographical detail that establish how remarkably gifted so many Russian Bolshevik intellectuals were. Some were liquidated by Stalin; others like Maksakovsky succumbed to illness. He died on November 2, 1928 at the age of 28 probably as a result of the effects of early bouts with dysentery suffered as a Red Army fighter during the Civil War. To quote Day:

Besides being an impressive scholar, Maksakovsky was also the prototype of a Marxist revolutionary. What we know of his biography reads in parts like a Sergei Eisenstein film, or the heroic Soviet fiction of the 1920s. He was born in 1900 in the factory town of Ilevo, located in the guberniya of Nizhegorod in the Volga River basin. His father and three brothers were metalworkers, but, from 1912-16, the family returned to the land after the factory where they had been employed closed down. In 1916, they moved to Yekaterinoslav, in south-central Ukraine. Here, his brothers became involved in strike activity, which might have contributed to his political education. When the Ukrainian Rada declared independence in June 1917, Maksakovsky was recruited into Bolshevik-inspired underground work and joined the party in 1918. Forced into hiding by an arrest warrant, he resumed party work and served as a volunteer with the Red Army when it reached Yekatorinoslav early in 1919. He briefly attended a party school in the Ukraine, but then returned to the Red Army. He fought at Yekatorinoslav and later worked in the underground in the Poltava region. In October 1919, he was taken prisoner by Denikin’s forces and sentenced to execution as a `Bolshevist commissar and spy’. After convincing the soldiers who were escorting him to defect to the Bolsheviks, he eluded the death sentence and survived to fight against the anarchist forces of Nestor Makhno, serving briey as chairman of a military-revolutionary committee. Following a bout of typhus, in 1920 he was sent to Sverdlovsk, in Ukraine, where he worked as instructor in a party school until 1924. He subsequently taught at the Plekhanov Institute of the National Economy, and, in 1925, he was invited to join the Institute of Red Professors. Illness prevented him from delivering a projected course on Marxism at the Communist Academy, but, in the autumn of 1927, he participated in a seminar at the Institute of Red Professors dealing with Marxist economic theory. The notes from that seminar became “The Capitalist Cycle: An Essay on the Marxist Theory of the Cycle.”

Unfortunately, neither Day’s article nor “The Capitalist Cycle: An Essay on the Marxist Theory of the Cycle,” which appears in the same issue of HM, are accessible unless you have a university account like me, and probably only if the account is at a blue chip research university like Columbia.

Referring to the business model abstractions of V. 2 of Capital, Maksakovsky writes:

General resolution of the problem, however, is not the same as a comprehensive analysis of the real course of capitalist reproduction. It is not possible to depict capitalism’s pattern of development within the limitations of a smoothly rising curve. When the problem of reproduction is posed that abstractly, the cyclical pattern of capitalist reproduction cannot be revealed. For that purpose, one needs to advance to the next and final stage of a more concrete analysis, while remaining within the context of the abstract method. Thus, a transition must occur from general resolution of the problem of social reproduction to the real pattern of this process. Above all, this transition must include: 1) extensive action of the law of value and the resulting prices; 2) growth of the organic composition of capital, which is connected with the fully developed activity of capitalist competition; 3) the role of credit. The `cause’ of cyclical movement must be found precisely in the fully developed activity of the mechanism of real reproduction, which is revealed by including the foregoing factors that Marx left out of his general theory of reproduction. As Marx says elsewhere, the cyclical movement can be understood `only in the real movement of capitalist production, competition, and credit’.

For Maksakovsky, as well as Luxemburg and Grossman, the real course of capitalist reproduction is not self-regulating. Indeed, he repeatedly refers to it in terms of anarchy:

Here Marx brilliantly characterised the essence of a crisis. He revealed its dialectical nature. The process of production and circulation represents the unity of the turnover of capital. Nevertheless, this unity is not monolithic – it is an anarchic sum of the autonomous parts of the social whole. The crisis expresses mutual alienation of these moments, the familiar struggle of individual and separate capitals against the social conditions of their turnover. However, if the crisis were merely a condensed expression of this struggle and nothing more, continued existence of a social whole would be impossible. The already existing `autonomous’ and `anti-social’ tendencies of individual capitals would be reinforced; and because every phase of each capital’s turnover depends directly upon the passage of other capitals through their own successive phases, if these tendencies prevailed even briefly they would cause the social system’s deformation and disintegration into its most basic elements, which cannot exist unless they are closely interconnected.

It is really quite a shame that so important a text such as “The General Theory of the Cycle” will remain inaccessible to the general socialist audience due to the rather narrow breadth of the editors of HM. In past discussions with one of their editors, a rather ghostly presence on Marxmail and other mailing lists, I was told that it is strictly economics. Without the hefty price tag for a print subscription, they would not be allowed to keep the journal afloat.

Meanwhile, there’s this chilling reminder at the tail end of every HM article I download from the Columbia electronic archives:

Copyright of Historical Materialism is the property of Brill Academic Publishers and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written permission.

Somehow, this seems a bit insane to me. Citing a paragraph or two from a couple of articles in HM violates copyright laws? One might expect Brill and the HM editors to be happy that they are getting some exposure on a mailing list with over 1100 subscribers and a blog that averages about 1000 hits a day.

But then again, I have never been interested in making money.

6 Comments »

  1. i do not understand this journal, i have long heard about it, but since i am out of uni, i do not have acess to it and the cost is cost prohibitive… oh well…

    Comment by jeremias — August 20, 2008 @ 11:53 pm

  2. Greetings,

    Thank you for bringing Maksakovsky’s work to the attention of readers. After decades of studying Soviet Marxism, I think Maksakovsky ranks second only to E.A. Preobrazhensky in terms of the quality and importance of his writing. You may be interested to know that Brill has also published the entire book by Maksakovsky in a separate edition. I’m afraid, however, that it too is quite expensive. Something to watch for: I am currently co-editing the collected works of Preobrazhensky in 3-4 volumes, the first of which might appear in English within a year or two.

    Best wishes, RBD

    Comment by Richard B. Day — August 24, 2008 @ 4:16 pm

  3. That is annoying especially as the people who write for HM are all of the left and no doubt write for it on teh cheap or even for free (and I know someone who subbed for free on it aswell).

    look forward to the books on Preobrazhensky

    btw here is an overaccumulation analysis of the current crisis with also an attack on long curves

    The Credit Crunch – A Marxist Analysis
    http://www.fifthinternational.org/

    Comment by keefer — August 30, 2008 @ 12:51 pm

  4. Andrew Burgin has the book on sale here for £15, which is closer to reality, though you would have to pay the postage from London
    http://www.andrewburgin.co.uk/product_info.php?products_id=1463&osCsid=81a8bbccd88dd5993b0d2996f2797141

    Comment by James Heartfield — July 5, 2011 @ 10:08 am

  5. $20 from Haymarket Books. Discounts for book clubs and study groups.

    http://www.haymarketbooks.org/pb/The-Capitalist-Cycle

    Comment by Brian — September 25, 2011 @ 5:34 am

  6. Pavel V. Maksakovsky: The Marxist Theory of the Cycle
    Available here: http://depositfiles.com/files/nh8a9s9zg

    Comment by Bill Kerr — October 5, 2011 @ 10:04 am


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